Symantec sells Veritas for $8 billion

<p>The Norton antivirus maker had been planning to split into two for months.</p>

Symantec today (August 11th) announced plans to sell its data storage business Veritas to a group including The Carlyle Group and Singapore's sovereign wealth fund for $8 billion (£5.1 billion) in cash. The deal is expected to close by January 1st, 2016.

The Norton antivirus maker said it expected to receive about $6.3 billion in net cash proceeds from the transaction. It had been planning to separate its security software business from Veritas for months and announced a tax-free spinoff last October.

The separation into two distinct entities could lead to acquisitions, given that large companies including EMC Corp and Hewlett-Packard Co are interested in the stand-alone security business or in an independent storage business.

Weak sales

The company has seen revenue growth turn negative in recent months mainly due to slowing PC sales, along with sluggish demand for storage and data management software. 

While security providers have mainly benefited from demand for technologies to prevent attacks, Symantec has remained behind its competitors. The security giant is to announce its fiscal first quarter 2016 earnings later today, and most analysts are expecting a weak financial performance for the three months ending in June.

Market watcher Technology Business Research (TBR) is forecasting the company’s year-on-year revenue to decline by around 12 per cent, after a 6.6 per cent year-on-year drop the previous quarter.

This is latest company to split after a series of Silicon Valley technology companies broke into smaller pieces in recent months.

Hewlett-Packard announced last year that it would be transforming its better-performing computer and printer business and its corporate hardware and services operations into two different entities. 

Online auction site eBay also revealed it will split from its payments system PayPal into a separate company in the second half of 2015.

Symantec shares traded seven per cent higher at $24.57 today in premarket trading in New York following the report.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.